Citi price target estimates a $330 enterprise value for each of the company's active accounts applied to the firm's 2022 forecast of 70 million active accounts.
"In the US, we think there are just two firms: Netflix and Roku. Their business models couldn’t be more different. But, the fate of the equity we suspect is similar. Both turn on sub growth and rising value per sub," analyst Jason Bazinet wrote.
Roku shares were rising 3% to $152.14 in premarket trading Wednesday.
Bazinet's bullishness stems from Bazinet's view that original equipment TV makers (Samsung, LGE, Vizio) are engaged in a complex battle with third parties such as Roku and Alphabet (GOOGL) - Get Report to control internet protocol television operating systems.
The third party players are winning this battle, according to Bazinet.
"When we look at the major tech players, there doesn’t seem to be dominant IPTV strategy. Alphabet and Roku cover the entire waterfront: they sell IPTV hardware, push their TV OS and hope to monetize IP video with their app that sits inside the OS," Bazinet said. "Other players -- like Amazon, Apple and Netflix -- are more focused on a narrower slice of IPTV opportunities."
Citi estimates that globally there are about 2.5 billion TV households, but only about 50% have wireline internet connectivity, and only about a third of those televisions use a video on demand service, giving Roku and others plenty of room to run.